The Kingdom of Saudi Arabia’s (KSA) economy grew at the fastest pace in over a decade in Q2 2022, as high energy prices continued to benefit the oil-exporting nation, according to Al Rajhi Capital Research.
The kingdom’s GDP grew to 12.2% in Q2 2022, outpacing the 9.9% GDP recorded in Q1 2022. The International Monetary Fund (IMF) has forecast that Saudi Arabia will be one of the world's fastest-growing economies, with the kingdom's GDP set to grow by 7.6% this year.
Moreover, Standard & Poor Global Ratings affirmed Saudi Arabia’s rating at “A-/A-2” with a positive outlook citing higher oil revenues, rising oil production and the government’s robust reform programme.
Money Supply (M3) grew +9% y-o-y in August to stand at SR2.44 trillion ($650 billion); while M1 and M2 increased 5.1% y-o-y and 7.1% y-o-y, respectively. On a monthly basis, M3 rose 0.3% in August (-0.3% m-o-m in July). As per the weekly money supply data by Saudi Central Bank, M3 may be higher in September than in the month of August.
Banking sector credit witnessed a growth of 15.8% y-o-y (+1.6% m-o-m) in August; while bank claims on public sector increased 9.6% y-o-y (+1.2% m-o-m) in the same month.
Meanwhile, deposits rose 10.3% y-o-y (+0.6% m-o-m) in August. Meanwhile, LDR came in at 81.46% in August.
Saudi unemployment rate came in at 9.7% in Q2 2022 as compared to 10.1% in Q1 2022; while overall unemployment in the kingdom came in at 5.8% in Q2 2022 as compared to 6% in Q1 2022. Further, the Saudi labour force participation rate increased to 51.8% in Q2 2022 (50.1% in Q1 2022).
Meanwhile, the average monthly wages of Saudi nationals increased 6.3% q-o-q to SR10,430; while the overall monthly wages rose 4.3% qo-q to SR6,722.
Banking sector net profit before Zakat and tax increased 21.8% y-o-y to SR6.6 billion in August as compared to an increase of 54.3% y-o-y in July. On a monthly basis, the banking sector profits rose by 13.5% in August (+3.5% m-o-m in July).
Saudi Central Bank’s foreign reserves, on an annual basis, rose 0.6% in August versus an increase of 5.1% y-o-y in July; while on m-o-m basis, the reserves fell 1.4%.
Total sales value for Point-of-sale (POS) increased 21.2% y-o-y in August (+17.7% y-o-y in July). Meanwhile, cash withdrawals in value terms declined 1.4% y-o-y in August (-2.6% yo-y in July) to SR46.2 billion. The rise in POS transactions was driven by rise in ‘Miscellaneous Goods & Services’, ‘Education’, ‘Restaurants & Hotels’, ‘Transportation’ and ‘Food & Beverages’ segments increasing 40.3% y-o-y, 35.3% y-o-y, 25.6% y-o-y, 23.9% y-o-y and 15.3% y-o-y, respectively.
Remittances (Personal Transfers) by Saudi nationals increased 10.2% y-o-y in August (+48.7% y-o-y in July). However, remittances by non-Saudi nationals declined 13.2% y-o-y in the same month (-7.3% y-o-y in July).
The kingdom’s non-oil exports in month of July increased by 26.4% y-o-y, compared to the increase of 29.5% y-o-y in June. Segment-wise, shipment of chemical products and transport equipment rose +46.9% y-o-y and +317.1% y-o-y, respectively; while that of plastics & rubbers declined 3.8% y-o-y. Merchandise imports increased 18.3% y-o-y in July as compared to the increase of 31.0% y-o-y in June. Meanwhile, China stood as the top export destination and continued to be the largest import country in July.
Segment-wise, ‘Mining & Quarrying’ increased +23.3% y-o-y, followed by Wholesale & Retail Trade, Restaurants & Hotels’ (+16.4% y-o-y), ‘Manufacturing’ (+13.4% y-o-y), ‘Construction’ (+8.8% y-o-y), ‘Finance, Insurance, ‘Transport, Storage & Communication’ (+7.8% y-o-y), ‘Electricity, Gas and Water’ (+3.0% y-o-y) and ‘Real estate and Business services’ (+2.0% y-o-y).
Credit and deposit growth
Banking sector credit growth continued to witness a positive growth of +15.8% y-o-y in August (+1.6% m-o-m), versus the growth of +14.9% y-o-y in (+0.6% m-o-m) in July.
Further, claims on the public sector increased 9.6% y-o-y (+1.2% m-o-m) in August, as against the rise of 11.3% y-o-y (+1.6% m-o-m) in July.
Meanwhile, deposits grew by 10.3% y-o-y in August (+0.6% m-o-m), versus the growth of 9.3% y-o-y (-0.2% m-o-m) in July. ‘Business and Individual’ deposits, which constitute for ~65% of the total deposit base, grew 5.1% y-o-y, while ‘Government Entities’ deposits increased 20.1% y-o-y (+2.4% m-o-m).
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